Iowa's Limited Benefit Plan: Executive Summary

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Acting under federal waivers authorized by Section 1115 of the Social Security Act and Section 17(b) of the Food Stamp Act, Iowa implemented a comprehensive package of welfare reforms on October 1, 1993. These reforms replaced Aid to Families with Dependent Children with the Family Investment Program (FIP) and made complementary changes in the Food Stamp Program. The reforms encourage and require welfare recipients to take steps toward self-sufficiency. These steps, which are specified in the Family Investment Agreement (FIA), may include participating in education programs, engaging in job search and job readiness activities, and obtaining employment. The reforms stop short of requiring FIP participants to achieve self-sufficiency; however, it is expected that by following the required steps most of them will eventually leave cash assistance.

The Limited Benefit Plan (LBP) is an alternative assistance program for FIP participants. Adult members of FIP cases who are able-bodied and are not caring for infants are required to develop and carry out FIAs under the auspices of the PROMISE JOBS program, which provides employment and training services to welfare recipients in Iowa. If those individuals do not comply with this requirement, they and their associated FIP cases are assigned to the LBP. These assignments are most often perceived as sanctions for failing to develop and carry out an FIA, but some reflect the wishes of the individuals. LBP assignments may be canceled if the individuals come into compliance with the FIA requirement or, less frequently, on appeal. The original LBP provided three months of cash benefits at the same level as under FIP, followed by three months of reduced cash benefits, and then six months of no cash benefits. The initial period of level benefits was eliminated in February 1996, resulting in a modified LBP that provides three months of reduced benefits, followed by six months of no cash benefits. LBP cases may reapply to FIP at the end of the period of no cash benefits, but those who do so are again subject to the FIA requirement.

This report presents findings from a study of the original LBP conducted by Mathematica Policy Research and the Institute for Social and Economic Development for the Iowa Department of Human Services (DHS). The data analyzed in this study are from DHS records on over 4,200 cases assigned to the LBP during six months in 1994 and 1995, a survey of 137 cases whose cash benefits had been terminated under the rules of the LBP, and case studies of 12 LBP families. The findings provide a comprehensive picture of LBP cases—who they are, why they are on the LBP, how the loss of cash benefits affects their financial status and family functioning in the short run, and what they are doing to cope.